SEBI Files Criminal Charges Against Sahara Group
Capital Market Regulator – SEBI has filed criminal charges against the Sahara Group, asserting that the group refused to accept the documents submitted by SEBI regulators.
Background of the Dispute
SEBI appealed for criminal proceedings against Sahara Group head Mr. Subrata Roy and other managing directors, alleging that the group violated regulatory orders. Previously, on August 31, the Supreme Court ordered India Real Estate Corporation and Sahara India Housing Corporation to refund Rs.17400-Crore. The Supreme Court was convinced that the amount was collected from about 3-Crore investors through Optionally Fully Convertible Debentures (OFCDs) offering 15% interest.
Sahara's Claims and SEBI's Responses
Sahara Group officials claimed that SEBI did not accept the submitted documents, which led to an appeal to the Securities Appellate Tribunal. The appellate authority ordered SEBI to respond quickly. In response, SEBI filed a petition before the Mumbai metropolitan magistrate to file criminal charges against the Sahara Group and its head.
Details of the Petition and Orders
The petition filed by SEBI alleged violations of a series of orders by Mr. Roy and other senior management members of both companies. The Supreme Court had empowered SEBI to attach Sahara Group properties if the group failed to comply with the SC order. The court also empowered the regulatory authority to freeze the bank accounts of the Sahara Group.
Timeline of Document Submission
SEBI records indicate that the group was late in submitting the list containing full details of all OFCD investors. However, Sahara Group claimed that they submitted the documents on time. The group also stated that SEBI did not accept the documents but only the CD containing the details of all OFCD investors.
Plea for More Time
Sahara Group had earlier approached the Supreme Court demanding more time for the submission of documents, citing the difficulty in submitting 30-Crore documents. The group hoped that the regulator would fine them for the delayed submission but not refuse to accept the delayed documents.
SEBI's Rejection and Further Actions
SEBI refused to accept the documents as they were submitted very late after office hours. SEBI approached the court to take further action against the Sahara Group for failing to deposit Rs.24000-Crore on time. SEBI also filed criminal charges against the group based on non-compliance with SC orders.
Rare Use of Criminal Proceedings
Though SEBI is empowered by the SEBI Act to file criminal complaints, it seldom uses this provision, preferring financial penalties over imprisonment. Criminal proceedings typically last longer than monetary penalties. The Supreme Court had empowered the regulatory body to attach properties of the group if it fails to meet the order timely.
Controversial Decision
Despite these troubles, the group’s decision to approach the Securities Appellate Tribunal for more time to submit investor details raised eyebrows.